Valero challenges Benicia’s rejection of crude oil train project

In a letter this week, a Valero oil company attorney contends the city of Benicia acted illegally when it rejected Valero’s plan to ship two 50-car oil trains a day through Northern California to the company’s Benicia refinery.

The City Council voted unanimously last month to deny Valero Refining Co. a permit to build an oil transfer station at its bayside refinery. The company has been attempting since 2012 to get city approval for the project, which would allow Valero to receive train shipments of North American oil on tracks that run through downtown Sacramento, as well as Roseville, Davis, West Sacramento, Dixon and other cities en route to the refinery. The oil company currently gets oil via marine shipment and pipeline.

In a Monday letter to the city, attorney John J. Flynn III of the Nossaman LLP law firm in Irvine accused Benicia of rejecting the project proposal without providing adequate legal reasons. He also said that the city’s illegal action technically means the city has given Valero approval to build the project.

“There are no legal grounds on which to deny Valero’s permit application,” Flynn wrote. “The vague statements made at the (Sept. 20 council) hearing did not adequately link the conclusions stated therein with evidence in the record, and therefore under the Permit Streamlining Act the permit was approved by operation of law.”

He concluded by accusing the city of trying to come up with reasons, after the fact, for its denial, calling that “a desperate bid to deny Valero’s permit application, despite the lack of any legal or factual bases for such a denial.”

The Benicia City Council on Tuesday night voted unanimously, however, to approve a list of findings to support its Sept. 20 rejection of the Valero proposal. The city concludes, in those findings, that the project “would be detrimental to the public health, safety and welfare of persons residing and working in the adjacent neighborhood, and detrimental to properties and improvements in the vicinity.”

The findings also site potential harmful environmental impacts from the project.

Crude oil train projects have become controversial in North America in recent years. Fracking technology has opened vast new oil fields in North Dakota and elsewhere, leading to dramatic increases of shipments via train. The increase has led to repeated train derailments and explosions. The worst of those accidents killed 47 people in a Canadian town three years ago. Federal transportation officials have attempted to increase oil train safety via stricter regulations, but officials in cities along rail lines, including Sacramento, say federal officials have not done enough.

Federal interstate commerce law appears to prohibit Benicia from making its decision based on any concerns about what dangers the oil trains may pose to cities and habitat along rail lines.

Benicia officials have steered clear of saying their decision is based on rail transport concerns, but several Benicia council members and planning commissioners have acknowledged concerns expressed by Sacramento and other rail cities.

In the city’s findings, officials note, as a point of information, that “current regulations are inadequate to protect residents of Benicia, and people who live and work along the rail corridor from the oil fields to the refinery, from the risk of release, fire and/or explosion caused by derailment of a tank car carrying highly volatile Bakken crude oil or other similar crude oil.”

The state attorney general earlier weighed in, arguing that Benicia has the legal right to reject the Valero project. Representatives of the Sacramento Area Council of Governments, which sent Benicia several letters of concern about the project, cheered Benicia’s decision to deny the Valero request.

The council’s vote on the findings represents the final city step on the project proposal. Several City Council members, however, have said they fully expect Valero to challenge the city rejection in court.

“They are continuing the drumbeat that this is not over,” Mayor Elizabeth Patterson said of the Valero letter.

Valero spokesman Chris Howe in an email this week to The Bee said the company “continues to consider all of its options.”

This story was originally published October 4, 2016 at 1:26 PM with the headline "Valero challenges Benicia’s rejection of crude oil train project."